Ghana government to issue GH¢500m bond to settle and restructure debts

The Ghana government will issue a three-year fixed rate bond of GH¢500 on Thursday January 7, 2016 to settle maturing debt. The bond would also be used to restructure government’s debt.

The rate for the cedi-denominated bond which matures on January 7, 2019, will be decided by auction, closing at 1:30 pm, according to a notice by the Bank of Ghana.

Bidding will be available to both resident and non-resident investors

The Bank of Ghana said all payments by government in respect of the bonds, will be subject to withholding tax but a tax gross-up provision for non-resident investors, means they will receive net amounts equal to what they would have received in the absence of any tax.

Interests on the bond will be paid semi-annually in July and January.

Subject to listing rules for government securities, the bond shall be listed on the Ghana Stock Exchange for secondary market trading both at the floor of the exchange or over the counter.

Ghana’s debt as at September 2015 was GH¢94.5 billion, about 70 per cent of GDP.

The issuance of this bond, however comes against a promise by the government not to borrow in 2016 to pay up its debt.

A deputy Minister of Finance, Mr. Cassiel Ato Forson told journalists in Accra at a Post Budget Analysis Forum that the government would not accumulate any debt more from 2016, as it would not borrow to pay up its debts.

By Emmanuel Odonkor